Pentagon’s Contract Managers Have Room for Improvement

Last month, the Project On Government Oversight (POGO) reported the scathing findings of previously unpublished government investigations into contract mismanagement committed by none other than the Pentagon agency dedicated to managing contracts. When considered alongside other audits and reviews of the Defense Contract Management Agency (DCMA), the reports paint a disturbing picture of systemic failures and sloppy management, casting doubt on the agency’s ability to protect taxpayer and government interests in the trillions of dollars’ worth of contracts it administers. The investigative and audit reports POGO reviewed contain numerous recommendations that the agency has yet to address. While several of these recommendations were issued within the past few months, some date back three years or more, despite agency leadership agreeing with the recommendations on paper.

These recommendations present opportunities for the agency to improve its performance with thoughtful and deliberate changes. Reviewing them reveals underlying problems that cut across various programs, with major themes including training, management, and internal policies.

Properly managing defense contracts is a complicated and important part of our national security. Such contracts range from laundry and food services to body armor and fighter jets. Given the high stakes and the many ways things can go wrong, it is little surprise that the Government Accountability Office has kept the management of defense contracts on its “High-Risk List” since 1992 (the list was created in 1990). In similar fashion, the Defense Department’s Inspector General recently placed “Enabling Effective Acquisition and Contract Management” in the number three spot on a list of the Pentagon’s “top 10 management and performance challenges” for fiscal year 2018, above even cybersecurity.

Last month, the Inspector General collected and published all of its recommendations for the Pentagon that were unresolved as of March 31, 2018. It highlighted the theme of contractor oversight, which has 161 pending recommendations split among DCMA and other parts of the Defense Department. Yet even though the recommendations are split, the agency plays an outsized role in overseeing contractor performance.

Training: The need for additional training for contracting officers is a common theme throughout the unresolved recommendations for the agency. POGO’s review found 17 recommendations related to better training for contracting officers, specifically on: requesting and fully addressing contract audit findings; obtaining legal reviews and management approval; proper records management; contract terms and requirements; avoiding conflicts of interest; the standards for evaluating contracts; approving contract modifications; and more.

Training for other DCMA staff was recommended as well, specifically for finance and IT personnel, on the subject of budgeting and spending processes.

One shortfall for contracting officers appears repeatedly: establishing performance standards for contractors and using quality-assurance plans to determine if contractors are meeting those standards. POGO identified an additional five such recommendations from four separate reports within the last two years.

Management: The agency can’t blame all of its problems on lack of training. Management also needs to prioritize stronger supervision and oversight. For example, a September 2017 report involving a mismanaged information technology project—which POGO revealed last month—shows how management failed to either catch or care about ongoing violations of contracting policy. The report specifies that the contracting officer for the project “circumvented rules. Lack of training was not the cause of this problem.”

POGO identified nine open recommendations regarding the need for stronger supervision and discipline at various levels of the agency; one recommendation states that the agency’s entire IT department is in urgent need of better supervision from agency leadership.

Internal Policy Changes: At least 13 open recommendations focus on policy changes—many of which relate to strengthening or creating internal controls within the agency to prevent or correct future failures. Other topics include raising job qualifications, sharing pricing data for certain items across the Pentagon, and creating multi-functional teams to manage projects from start to finish. As with any new policies, management should ensure that these policies come with appropriate training for workers as well as corresponding oversight to ensure policies are being implemented properly.

Finally, a recommendation from POGO, for Congress: it should oversee DCMA’s conduct far more aggressively. The numerous recent Inspector General reports and the recent investigation into the agency’s violations of budget law and contract mismanagement provide a strong foundation for an oversight hearing or for other types of Congressional oversight. These reports and unresolved recommendations warrant tougher public scrutiny of how the Pentagon oversees the agency, how the agency manages itself, and how the agency oversees contractor performance.

More recommendations are sure to come, as two reports from the Pentagon’s Inspector General and at least one large internal investigation—part of the contracting disaster POGO recently reported on—are pending.

Agency leaders understand there is plenty of room for improvement. They should pay more attention to the low-hanging fruit that many of these recommendations represent. Each of these recommendations has a story behind it, and each that remains open for years on end is a testament to the failure of the status quo.